Accelerated depreciation

Definition

Any method of depreciation used by businesses for accounting or tax purposes that allows greater deductions in the earlier years of the life of a company asset, as opposed to the straight-line depreciation method.

Accelerated depreciation can be a useful tax incentive because it permits companies to defer payment of corporate income taxes by reducing the amount of taxable income each year. This in turn results in increased cash flow, encouraging companies to purchase more assets.